2014 Summed Up: My Annual Credit Check

I don’t usually write educational / how to type posts, but in honour of Credit Education Week (CEW), I’ve decided to do just that today. CEW is part of a national effort to raise financial literacy awareness and the importance of proper credit education. As always, I can only speak about my experiences, but I love to share what I’ve learned with others.

Since I started this blog, I’ve tried to make it an annual tradition to check my credit score and credit report around the end of the year. For those who don’t know, your credit score and credit report are two different things. Your credit score is a 3-digit number (between 300-900) that shows potential creditors how well you’ve used your credit to date, and helps them decide how risky it would be to lend money to you. The higher the score (750+ is ideal) the better you are with credit, which means creditors should see you as a low risk; this also helps you get access to the lowest interest rates.

Your credit report, on the other hand, is a much longer document. In it, you’ll find basic information (name, birthdate, address, employer, etc.), as well as a history of all the different types of credit you’ve ever opened. The credit history in your credit report will list all your accounts (both open and closed), the date you opened each of them, their credit limits, any current/past due balances, as well as a detailed payment history. It’s important to review your credit report to make sure everything is accurate (as it can take a long time to file a discrepancy and actually see it removed from your report). I like to review both, so I can get a clear picture of how future creditors will see me.

In November 2011, I checked my credit score and credit report for the first time, and was surprised to find that Equifax had given me a score of 778. According to them, I had “excellent” credit. But how could that be? At the time, I still had more than $5,000 of credit card debt + two instalment loans. And just five months before that, I’d been 100% maxed out. How was I “excellent” with my credit!? Hmm.

In December 2012, I checked my credit score and credit report again, and was disappointed to see that TransUnion had dropped my score down to 741. According to them, I only had “fair” credit now. Again, how could that be!? By this point, I had $0 of credit card debt + only small balances on the two instalment loans. I’d paid off $11,000 of debt that year. What was “fair” about this score!?

As I learned that year, issuers of credit don’t like when people carry $0 balances on their available credit – especially revolving credit (credit cards). My credit score dropped because I had no credit card debt, I had cancelled one of my two cards and, back then, I was barely using the card I kept because I didn’t trust myself with it yet. In short, I wasn’t really using the credit system, and the system didn’t like that.

Last week, I checked my credit score and credit report, and was (again) disappointed to see that Equifax had only inched my score up to 753. According to them, I have “very good” credit now. Excuse my language but I have to say that this pisses me off. I have no debt, use credit cards regularly and always pay them off. But that means no one is earning any interest from me, so I’m penalized with a lower score. Thanks, guys.

If you’re curious where I stand amongst the rest of Canadians, take a look. (Props to the 57%!)

The other reason I think my score isn’t “excellent” is because I only have one type of credit open right now: two credit cards (one I’ve had since November 2004!). According to the FCAC, “It is better to have a mix of different types of credit, such as a credit card, auto loan, line of credit or other loan.” Well, I don’t need an auto loan or any other type of loan, and I don’t want a line of credit. So, too bad for me, I guess.

Fortunately, none of this really matters right now. As you can see, the credit system is designed to help you get more credit – that’s it. And I won’t need more credit anytime soon, so I don’t need an “excellent” credit score to get me the best interest rate – but I will one day. Whenever I decide to buy a place, I’ll look at different ways I can improve my credit score. It’ll likely involve taking out a small loan or opening a line of credit, and paying someone a bit of interest. I got that advice straight from Gail, and it makes sense based on everything I’ve read about the credit system. But until that day comes, I’m going to keep paying off my cards each month and feel “very good” about my financial situation.

How to Check Your Credit Score and Credit Report in Canada

If you haven’t checked your credit score or credit report before, here’s how to do it:

First, there are two credit-reporting agencies in Canada: Equifax and TransUnion; I like to swap off, so I check it with Equifax one year, TransUnion the next, and so on. The agencies should both have all the same information about you, but I still think it’s a good idea to swap off just in case one looks different.

If you just want to look at your credit report, you can do that for free once/year! You should be able to find a form on both the Equifax and TransUnion websites, which you can download, print and mail off. Remember, though, that your credit report does not include your credit score.

If you want both your credit score and credit report, you’ll have to pay for it* ($22-24). Here are links to the correct Equifax and TransUnion webpages where you can do this. You only need to check once/year, so it’s not a huge cost. But if you don’t want to pay, at least get a copy of your report.

When was the last time you checked your credit score/report? Did you spot any errors?

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That’s crazy that 57% of Canadians have Excellent credit! I don’t know that we Americans could say the same! Unfortunately, credit is a necessary evil. I don’t particularly want it for auto or student loan debt, for it’s kind of necessary for buying a house. However, the way scores are figured is flawed, in my opinion :-)

We check our credit scores annually, just to make sure things are on the up and up. Interestingly, both of our scores increased right after we bought our first home. I understand why, but, it just seems so counter-intuitive that assuming a huge debt burden would increase one’s scores. I suppose it’s similar to the “suggestion” you got for adding a loan.

Ah yes, the credit score…..I ran into something similar. I had excellent credit even when I had $109,000 of credit card debt. Creditors LOVED me – after all, I was willing to use credit, AND willing to pay them outrageous interest each and every month to line THEIR pockets. What wasn’t to love? Mr. Brad Chaffee had it right when he called it a “debt score.” It’s the number tagged to you on the probability that creditors will make money off of you. If you carry a $0 balance, that probability decreases…….

I checked mine a couple years ago…I didn’t find any errors. That was maybe the 3rd or 4th time I’d checked in my life. I should mail away for the free ones again. I haven’t ever checked my credit score because I didn’t want to pay for it, and I didn’t really have any need to know. I would like to know what it is, out of curiousity, but I don’t want to pay for it so I guess it will remain a mystery.

That was really interesting to read, through, Dayle. I feel like you just talked yourself into spending money. If you don’t have any “need” to know, just get your report for free! If you see errors there, *then* check your score.

I checked mine in September. I do it every 6 months because I’m a little obsessed at seeing it climb. Since I first checked it around 3 years ago I’ve climbed from a 551 to 672. It’s slow going but I can’t wait to get in to the very good category.

When I was almost maxed out I got my car loan. At that time I had excellent credit and qualified for the lowest interest rate they were offering. The combined debt of my credit cards and that new car loan were equal to one year of my gross salary. Its funny because right now I would have trouble getting approved for even a credit card and I’m actually saving some money, have no credit card debt, and grossing a nice bit more.

Congrats on boosting your score, Trista! If it has gone up so much, why do you think it would be difficult to apply/get approved for a new credit card right now? Because of where it was a few years ago? (Not saying you should apply for one, I’m just curious.)

Any time I have inquired I’ve been shut down (Not that I have done that a lot. I’ve just tried to get a points card). Two of my credit cards were closed by the grantor so that is keeping me down for now. It should be better next year.

Considering a credit score is something lenders use to decide whether or not you’re a profitable individual to give more money to, it makes sense that they’d prefer people carrying more debt than those with zero balance accounts. They profit from people who are regularly indebted as they continue to pay interest. Us debt-free types are kinda useless to them.

Okay, so I am definitely in good company with my score – I’m just at 739 when I checked last week. And since I know I will likely be applying for credit in probably 2 years, hopefully I’m up in the “excellent” category by then. If I’m not, I’ll also have to follow Gail’s trick and maybe pick up an RRSP loan or something.

PS, thanks for linking to me mentioning that trick. Usually I feel bad about doing that kind of stuff – signing up for a free service and cancelling right away, but it’s the only time I will likely be able to do it. In one year when I do my next check I’m sure they won’t let me do it again. So it’s just one freebie :) And it only took a 5 minute phone call to cancel within 1 hour of seeing the info… they didn’t give me a hard time whatsoever.

You shouldn’t need to do anything. 739 is still a great score, and I’m sure you’d qualify for the best interest rate on a car in a couple years. I’m not actually worried about my score at all – it would just be “nice” if it were higher.

I last – and first – checked my credit score before G and I were moving to Toronto. That was in July and mine was a 784. Since then, I’ve cancelled one credit card and paid off the remainder of my student debt. I wonder what impact that will have on it when I check it again next July…

Personally, I’m of two minds about credit scores when one applies for credit. Credit history of course is another thing in that it documents your history of past credit loans and how well you maintained them and properly paid them off. Having owned a few houses over the years, where we had to apply for a mortgage (which represents a fair size credit loan), I would say that not only does the lender need to know your credit history but also: (1) if you have other outstanding debt and (2) (equally important) what your current sources of income are to adequately service that debt. Lenders have a rather complex point system formula that they use when deciding whether to lend out money to people and consider them to be credit worthy. Credit scores are just one factor, not the be all and end all.

I would say, from my readings elsewhere however, that it might preferable not to cancel one’s credit card but rather just don’t use it if it causes problems. Cancelling a credit card may impact the cost of one’s borrowing. That’s just the way those money hungry financial institutions work.

I don’t think you’d have any trouble getting a mortgage with an excellent rate with no debt, a credit card you pay off each month, and a job with a reasonable salary. This new fascination (obsession?) with a credit rating number is bizarre. No one knew or cared about these numbers 10 years ago. Banks look at more than just a number from TransUnion or Equifax.

We’ve NEVER had any kind of installment loan or a HELOC or a LOC or a student loan. The only credit we’ve ever had was a credit card each that was paid off in full each month. We had 0 problems getting an excellent mortgage and we had to tell them to stop raising the credit limit on our cards (in case they got compromised) and repeatedly tell them we don’t want or need a LOC or a HELOC.

I haven’t checked my credit report in awhile. I did a few years ago and everything was ok. I have gotten the free report and I have also paid for my report and credit score.

I will be checking my credit report in the New Year though since I had a check stolen (and cashed) in September.

One of the last times I went in to my credit union and spoke to my advisor she looked into my credit score and said it was really good.

I have always had a good report and score. When I was in college I was able to rent an apartment without a guarantor because my score was so good. Apparently I had impressed the apartment building managers with how good my score was. Especially for a college student. The trick is to make sure you make all your payments which I did.

My credit score has always been how I’ve measured my financial discipline, as I put EVERYTHING on credit. It’s worth noting that I have one credit card that I pay off in full every month and only spend this way for fringe benefits like frequent flyer points. My credit score (TransUnion) now sits at 742. It has not always been that way, despite only carrying “good” debt (home mortgage) and never ever missing a payment on bills.

I moved to the US in 2008 from Canada and found out very quickly that my good credit standing in Canada meant nothing here. I had to start all over. I was ‘graciously’ extended a $500 credit card by my bank that needed to be matched by funds in my bank account. Unknown to me, credit card companies were not willing to extend me credit. Each time I applied for a card and got ‘denied’, it negatively impacted my score. Here’s the kicker –in 2009, the bank gave me a home loan with little more than one year of US credit history that consisted of not much more than the on-time payments on my bank issued card. Keeping in mind this happened after the housing market crashed and lending practices “tightened”. From there, I was able to get a grown up credit card and rebuild my credit score (slowly) to where it is today.

That irks me too about being penalized for not having a mix of credit types! Several credit card issuers in the U.S. now give card-holders access to their credit score for free, but the scoring model can be different from the one actually used by a lender. Not sure if any card issuers in Canada do this yet.

We checked our credit 2.5 years ago. It was at least very good (I don’t remember the exact numbers it was around the time we were looking to buy a new house). The time we checked it before that , there was an error that we had fixed. A debt that had been paid in full had not been closed properly.

I have a friend who has debt that scares me (and it isn’t even mine) and she has excellent credit – in fact the bank is working hard to get them to take a larger mortgage! Sigh!

Thanks Cait for this post. I’m also a bit of what you can say a score-freak! Last time I checked my score with EquiFax, it was 850 back in July 2014. I just had one credit card and no other loan. Actually, I checked it to get a line of credit from BMO. However, recently, I was refused as a co-signer for a friend for a royal student line. The excuse was that I wasnt their client despite me having a stable, well-paid job and excellent score.
You are right that having a variety of “products” would help your credit but honestly I’m not a fan of this game.
The way I keep my score high is by using my card often but paying the debt in a short time, less than a week. I also keep a very low percentage of used credit, usually 3-5% of my limit.
Reading FCAC files on credit card helped me manage a way to figure out this way.

I am one of your followers and lives in the same city where you grew up.
I was encouraged to check my credit rating after reading this post. I tried Equifax but the link that night was not working so went to TransUnion without realizing they do it on a monthly basis. I did that a month ago. Lo and behold this morning, I had an e-mail from them and $16.95 PAP in my credit card! I phoned them right away to cancel the subscription as there is nowhere in their site a facility allowing me to do it.

I’m not sure if it’s the same in Canada, but in a lot of US states, insurance companies (auto and homeowners especially) use your credit score to help determine your rates. It can be frustrating to know that without debt my financial situation is more stable but my score is lower, so I may have to pay more for insurance!